A company has derivatives transactions with Banks A, B, and C which are worth +$20 million, $15
Question:
a) The transactions are cleared bilaterally and are subject to one-way collateral agreements where the company posts variation margin, but no initial margin. The banks do not have to post collateral.
b) The transactions are cleared centrally through the same CCP and the CCP requires a total initial margin of $10 million.
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If the transactions are cleared bilaterally the company has to provide collateral to Banks ...View the full answer
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